Mayor Jim Kenney takes office and appoints a new City Treasurer, Rasheia Johnson, who discovers some City accounts have not been reconciled in years.
A new accountant position is added to the Treasurer’s Office. The position is dedicated to working on the backlog of unreconciled accounts.
Began contract with a temporary staff accountant to review reconciliation process and assist with reconciliation of the Consolidated Cash account.
Thanks to the work that began in November 2016, the Treasurer was able to resume monthly reconciliations of the Consolidated Cash account for the first time in three years.
During the reconciliation process, an unreconciled balance of approximately $40 million was discovered in the Consolidated Cash account. This discrepancy began sometime between June 2014 and May 2017.
A Request for Proposal (RFP) is circulated for an external accounting consultant.
The Treasurer’s Office decreased the unreconciled amount in the Consolidated Cash account to $33.3 million.
A new accounting supervisor position was added in the Treasurer’s Office. The position is dedicated to the monthly reconciliations of the Consolidated Cash account.
The Treasurer’s Office decreased the unreconciled amount in the Consolidated Cash account to $28.6 million.
A nationally recognized accounting firm was hired to identify the causes of the discrepancy in the Consolidated Cash account and to support staff in the reconciliation process across the seven accounts. This consultant is helping the City develop additional internal controls to ensure we don’t fall behind again.
Reconciliation Task Force formed to oversee the reconciliation of City cash accounts. Serving are City Treasurer Rasheia Johnson (co-chair); former Controller Jonathan Saidel (co-chair); Mayor’s Chief of Staff Jane Slusser; Finance Director Rob Dubow; Eric Siegel, Senior Investigator in Office of Inspector General; Harvey Rice, Executive Director of PICA; and Matt Stitt, Chief Financial Officer of Philadelphia City Council.
Two of the seven outstanding accounts are reconciled: Payroll and Supplemental Payroll. These accounts were last reconciled in September 2010 but are now reconciled and current to date.
The reconciliation task force held their first meeting to coordinate the reconciliation plan on July 12. The outside accounting firm has started identifying process recommendation changes. For example, they have emphasized that we need to continue to cross-train employees, to maintain a certain number of accountants on staff. They also advised that we develop detailed written procedures on how to complete the reconciliation process, an item that will be completed at the end of the firm’s engagement.
The City is on target to have all but three unreconciled accounts up to date from the initial seven by the end of September 2018, which is consistent with CTO’s original schedule. The outside accounting firm continues to work through Phase 2 of their work plan, which consists of trend analysis for inflows and outflows; and detailed analysis of bank generated activity to the City’s accounting system (FAMIS) for FY 2014-2017. The Treasurer’s Office is in the process of procuring a Treasury Management System (TMS). The TMS has a bank reconciliation module that will automate some manual aspects of the reconciliation process and potentially assist in reducing some discrepancies.
The City has fully reconciled all but three of the historically unreconciled accounts. Four of the seven previously unreconciled accounts have fully reconciled on the schedule originally laid out by the City Treasurer. In addition, working with outside consultants, the Treasurer’s Office has decreased the unreconciled amount in the Consolidated Cash account to $23.3 million. The outside accountants continue to work through their work plan.
The Treasurer’s Office in November decreased the unreconciled amount in the Consolidated Cash account to $2.1 million, down significantly from the October total of $23.3 million. The majority of the reduction was accomplished by identifying duplicate debt service payment entries made in 2015 and 2016. In this case, duplicate journal entries were made, but only one payment was ever processed. No funds beyond the correct amount were disbursed. Control procedures have now been instituted to detect and prevent the type of deficiency from re-occurring in the future. The outside accountants continue to work through their work plan. The City has fully reconciled all but 3 of the historically unreconciled accounts, and are on target be fully reconciled by the end of calendar year 2018.
Following the tremendous progress in November, the Treasurer’s Office in December further decreased the unreconciled amount in the Consolidated Cash account to less than $900,000. Of 77 City bank accounts, 76 accounts are now fully reconciled and the remaining account will be fully reconciled in early January. Treasurer Rasheia Johnson announced, “I’m pleased with the progress we’ve made and proud of the safeguards that we’ve instituted to prevent this from happening in the future. We will work diligently into the new year to bring this matter to full closure."
The Treasurer’s Office has further decreased the unreconciled amount to approximately $528,000. The Treasurer’s Office will continue to examine its files to resolve the remaining difference. It’s important to note, however, that there will often be timing differences at the end of months that can result in small differences between the amount shown in the City’s accounting system and the amounts shown in bank statements.